Earlier quoted context omitted.
When offering convertible debt, the investor accepts the valuation at the next round of investments (in this case series A). The risk for the convertible debt investor is that this valuation will be very high and the series A can take a long time. To limit this risk convertible debt investors negotiate valuation caps and discounts. Cap: The convertible debt gets converted at min=[series A valuation, cap]. Discount: T…
Can somebody give me an advice. We have a two person startup, that is making about 20k/mo and it's growing. I am the founder. The thing is, I do not currently plan to raise VC money. My goal is to achieve revenue of 200k/mo by 2013. It is very realistic, but the problem is that as the service grows, we spend more and more time on operations, since certain things were not timely automated. We need about 300k , so that…
90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
81–90 of 90 posts
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#82I have a question. What if the startup getting convertible debt never raises a round of funding and perhaps gets acquired or does an IPO?
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#83I have a question. What if the startup getting convertible debt never raises a round of funding and perhaps gets acquired or does an IPO?
I would assume the conversion is calculated at the value of the acquisition or IPO (which is really just a type of investment round). [edit: as it says, no discount so forget this part] Typically there's a conversion percentage kicker, so it might be 110% of the value (ie the early investor gets more for the risk)
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#84150K x 43 = 6,450,000. I'm guessing that there is a fair chance that at least one of the 43 companies alone will allow them to break even on their investment. They should end up doing extremely well on the deal.
Numbers missing: what is the typical valuation at Series A for a company coming out of YC? If it's $2 million then he'll wind up with (on average) 7.5% of each company (similar to what YC itself gets for about eight times less money), so to break even on one exit it'll have to be a $100+ million exit, which would be bigger than any YC exit so far as far as I know.
Heroku was acquired for ~$250 million
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#85Earlier quoted context omitted.
What people are pointing out is that nobody outside of this batch in Y Combinator has seen the paperwork, so nobody can actually verify that there isn't something hidden or sketchy present. I trust Paul implicitly, and I suspect most YC Founders do, and that probably has a lot to do with the acceptance rate. I wasn't in the meeting obviously, so I can't know how I would have reacted to the specifics, but I can say kn…
That makes sense. After re-thinking my previous comment, I suppose another potential downside might have to do with somehow missing out on the numerous copycat offers that I imagine will arise. At any rate, although I'm surprised that everyone has signed on so quickly it does seem like a really good deal for all involved. Edit: phrasing.
Do angel investors seriously give terms like "you can have this convertible note, but only if you don't already have a convertible note from Yuri"?
What rational reason would an angel investor have to avoid investing in a company that has taken this investment?
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#86Earlier quoted context omitted.
That makes sense. After re-thinking my previous comment, I suppose another potential downside might have to do with somehow missing out on the numerous copycat offers that I imagine will arise. At any rate, although I'm surprised that everyone has signed on so quickly it does seem like a really good deal for all involved. Edit: phrasing.
Do angel investors seriously give terms like "you can have this convertible note, but only if you don't already have a convertible note from Yuri"? What rational reason would an angel investor have to avoid investing in a company that has taken this investment?
Probably not. But I imagine that when it comes to the details some angels might be a better fit than others for certain companies due to their networks, etc. Also, if I had a company that needed about $200k and I had one offer for $150k from Yuri and one for $200k from another similar investor I might only take the $200k instead of both - it would represent a (hopefully small) difference in available shares once it was time for Series A. This is all speculation though - while it seems like fun, I haven't yet been on either side of the investor equation.
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#87Earlier quoted context omitted.
When offering convertible debt, the investor accepts the valuation at the next round of investments (in this case series A). The risk for the convertible debt investor is that this valuation will be very high and the series A can take a long time. To limit this risk convertible debt investors negotiate valuation caps and discounts. Cap: The convertible debt gets converted at min=[series A valuation, cap]. Discount: T…
Can somebody give me an advice. We have a two person startup, that is making about 20k/mo and it's growing. I am the founder. The thing is, I do not currently plan to raise VC money. My goal is to achieve revenue of 200k/mo by 2013. It is very realistic, but the problem is that as the service grows, we spend more and more time on operations, since certain things were not timely automated. We need about 300k , so that…
You could try outsourcing and/or hiring students, but I suspect that the quality of outsourcing available to the average individual or startup has decreased as a result of the publishing of books like 4HWW and The World is Flat.
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#88Earlier quoted context omitted.
When offering convertible debt, the investor accepts the valuation at the next round of investments (in this case series A). The risk for the convertible debt investor is that this valuation will be very high and the series A can take a long time. To limit this risk convertible debt investors negotiate valuation caps and discounts. Cap: The convertible debt gets converted at min=[series A valuation, cap]. Discount: T…
Can somebody give me an advice. We have a two person startup, that is making about 20k/mo and it's growing. I am the founder. The thing is, I do not currently plan to raise VC money. My goal is to achieve revenue of 200k/mo by 2013. It is very realistic, but the problem is that as the service grows, we spend more and more time on operations, since certain things were not timely automated. We need about 300k , so that…
Speaking as someone who's automating a large-ish business right now: 300k will buy you a lot of contracting. It might be possible to do what you want for less, which would expand your options.
Email me, and I'd be happy to discuss your situation and provide pointers where I can. (address is in profile)
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#89Does anyone else see that this offer will drastically change the tone and success rate of YC startups? Constraints (in the form of funding and time) were a large part of YC. Entrants got a low (but livable) amount of money and 3 months to come up with something great. That something would either sink or swim on demo day.(for more on how constraints help creativity: http://ecorner.stanford.edu/authorMaterialInfo.html?…
I was thinking this as well, but for a different reason. I, for one, would never enter the YC program. $15,000 (especially for that much equity) just doesn't work for most people. The only demographic that can really make that work are 20ish year olds coming right out of school. They haven't started real life yet, and have minimal obligations. Anyone else competent/qualified is probably quitting a job and has various bills and debts, and if they made the decision to do a startup, they already have some bootstrap money or a bit of revenue from a side gig, so that $15k isn't going to make or break them. For 150k however, this changes things entirely. YC can now attract a far more diverse pool of aspiring startups.
Re: 90% of Y Combinator Startups Have Already Accepted The $150k Start Fund Offer
#90Earlier quoted context omitted.
When offering convertible debt, the investor accepts the valuation at the next round of investments (in this case series A). The risk for the convertible debt investor is that this valuation will be very high and the series A can take a long time. To limit this risk convertible debt investors negotiate valuation caps and discounts. Cap: The convertible debt gets converted at min=[series A valuation, cap]. Discount: T…
Can somebody give me an advice. We have a two person startup, that is making about 20k/mo and it's growing. I am the founder. The thing is, I do not currently plan to raise VC money. My goal is to achieve revenue of 200k/mo by 2013. It is very realistic, but the problem is that as the service grows, we spend more and more time on operations, since certain things were not timely automated. We need about 300k , so that…
Hey, my email is in my profile. I'm obviously unaware of the details but $300k to "tidy up operations" seems to be a pretty large budget. I feel reasonably confident I'd be able to help you out (ie. providing such services) for less than that.